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NYC 9/11 Public Portal Document

The U.S. Economy The slowdown in growth that began in the second half of 2000 continues to cast a long shadow on the outlook for the U.S., and with some indicators showing further sign? of deterioration, the possibility of a rapid turnaround appears unlikely. So far, manufacturing has borne the brunt of this slowdown. Employment in this sector has declined by over 400,000 in the past twelve months, a loss of about two percent. The NAPM (National Association of (Purchasing Managers) index, a comprehensive barometer of manufacturing activity, was up slightly in March to 43.1 percent but remains deep in recessionary territory. Moreover, any hope of an export-led recovery has dissipated SERVICE SECTOR AND with the news that growth in the MANUFACTURING SECTOR EMPLOYMENT IN THE U.S. Japanese economy continues to falter While the manufacturing sector continues to contract, (early estimates indicate a further the service sector holds up, adding jobs. contraction in Q2 2001) while growth , 0.4 in Europe continues’td be anemic at best. Adding to these woes is concern over the significant build-up of 0.2 capacity in the high-tech sectors of the economy, punctuated by layoff announcements in bellwether firms once perceived as perpetual engines of job growth, like Lucent, Cisco, I 1 -0.2 Intel, and Motorola. Outside of manufacturing, other sectors of the economy continue to I -0.4 ■ Service Sector Employment, 3- Month Moving Average show signs of growth, albeit at a ■ Manufacturing Employment, 3- Month Moving Average lower rate. Services employment in -0.61---- the U.S. is up 2.5 percent in the first 2000 2001 quarter over QI 2000. Sales of new and existing homes, though down CONSUMER CONFIDENCE AND HOME SALES from their highs, are still averaging a J quite robust 6 million units on an Consumer confidence, though down sharply, remains quite high by historical standards and housing sales have remained strong. annual basis. Most importantly, 160 7 corisumers have so far shown J! remarkable resilience. March data, in Consumer Confidence, L^t Axis 140 ■B New and Existing Home Sales, Right Axis faci, showed consumer confidence 6 (Conference Board) edging back up il and retail sales in the early part of the 120 year have held up even in the face of a sharp correction in the stock market S’

wh,ich wiped out an estimated $5 / s trillion in household wealth. 80 4 ,i Given the pockets of strength outside of the manufacturing sector, 3, 60 the economy is expected to avert a recession though growth is expected 40 —12 to stall this year. Specifically, the 80 84 i 88 92 96 00 sharp pullback in real GDP (Gross I I ! I 22 I !

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